Breaking from the Bank

With Wall Street down and investment bankers in career transition, some might land in CFO chairs. What challenges and opportunities will they find?

Clarke received a fiery baptism into CFO-dom a few years ago at Inverness Partners, a private equity group. An automotive parts supplier in Inverness’s portfolio was having cash-flow problems, had tripped bank covenants, and was consolidating manufacturing plants when the CEO and CFO resigned unexpectedly. Clarke stepped into the CFO spot to sell pieces of the company and raise equity financing. “We kept the company out of bankruptcy and paid 400 trade creditors 60 cents on the dollar,” Clarke says The context made the job exciting. “When you’re trying to save a sinking ship, you don’t have time to worry about shaving $10,000 off the auditing bill,” he says.

But Clarke eventually left the post because he found the routine tasks “boring.” Most CFO slots do not have the continuous action that dealmakers thrive on. It is still in part a “control and planning position,” Clarke says, especially if the company is in a very steady state. After Clarke fixed the problems, he passed the baton to his controller after a year and a half.

Indeed, it is the ability to handle what some would call mundane tasks — accounting, taxes, risk management, cash management, and budgeting — that separates the bankers who last as CFOs from those who don’t, notes Richard Lark, CFO of Brazilian airline GOL Linhas Aereas Inteligentes and a former Morgan Stanley vice president.

Lark was fortunate to get exposure to the basics of the operational side of finance at a privately held Internet startup before joining GOL in 2004 and steering its simultaneous listing on the Brazil and New York stock exchanges. GOL was also one of the first foreign-listed companies to complete Sarbanes-Oxley 404 certification.

“To be successful, you have to embrace the debits and the credits. You have to be the accountant, the treasurer, all of those people at any point in time,” Lark says. He counsels bankers not to “jump into the public company fire” and instead get experience at a privately held outfit first. Many of Lark’s banking colleagues who became CFOs in Brazil’s IPO boom the past few years didn’t last in corporate finance, he says.

It’s just a fact: Banking, broadly, prepares an executive for only 50 percent of the responsibilities of a CFO, says Jeffrey Pribor, chief financial officer at General Maritime Corp. Pribor landed a CFO spot four years ago — in the same city and industry, for an NYSE-listed company that he had helped take public — after 18 years in investment banking. “It was almost too good to be true,” he says.

Pribor had the expertise to deal with financial services vendors and handle the investor relations part of the job, but the internal-facing functions he learned as he went. What caused sleepless nights were the things “that there aren’t a good how-to-manual for” and the “unknown unknowns”— the things he didn’t know that he didn’t know. Directors and officers liability insurance was one. “I had no idea how complicated D&O insurance was,” he says. “The variations in coverage and cost boggle the mind. When it came time for the first renewal, I learned in a hurry.”

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